Ontario Motorists Overpaid $5B for Auto Insurance, Report Finds
Drivers in Ontario may have overpaid as much as $5 billion for auto insurance, according to a new report released by the Ontario Trial Lawyers Association (OTLA).
Claims are on the decline, but insurance profits soared to $1.5 billion in 2016. The figure represents a 60% increase compared to four years earlier, according to the report.
The OTLA estimates that drivers paid $143 more out of pocket each year for auto insurance.
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“The insurance industry is not required to disclose the profit it makes,” said OTLA president Claire Wilkinson. “Everybody who drives a car in Ontario has to buy insurance, the government regulates how much is charged in premiums, but even the financial commission and the government don’t know how much profit they make.”
The increase in profits, according to the report, is likely due to a widening gap between the cost of claims coverage and premiums. Claims decreased by 27% in 2011, but premiums barely budged.
The report’s author says it’s difficult to determine the cause, as insurance companies are not required to report their actual operating expenses.
Ontario has the second-highest premiums in Canada, just behind British Columbia.
Drivers may find some financial relief in a new “pay as you go” insurance being launched in Ontario. Those who log less than 9,000 km per year will be eligible for the “pay as you go” program, which will be the first of its kind in Canada.
Offered by CAA Insurance, the program is called MyPace. Ontario customers can enroll in the program starting in July. Drivers will keep track of how much they drive and pay for their insurance based on that mileage.
“People should be able to access the insurance they need, when they need it, at a price and payment schedule that works for them,” said Matthew Turack, CAA Insurance president.
As part of the program, a device is plugged into the vehicle that connects to a web portal or smartphone app to track mileage data and distances of trips.
The program is not like others that monitor the speed and braking patterns of drivers. MyPace is strictly mileage based.
The MyPace program may help drivers win the fight against higher insurance premiums.
Drivers who enroll will have mileage loaded in 1,000-kilometer increments. Alerts will be sent out when drivers near the end of an increment. If drivers exceed the annual cap, the underlying insurance premium rate will apply to the overage.
Author: Jacob Maslow
